Octaviant Financial has announced that Starr Insurance will join its partnership with Marsh to offer drug warranty services that enable pharmaceutical companies to guarantee the effectiveness of high-cost therapies.
Through this partnership, Octaviant will provide drug warranties through its subsidiary, Actuaria Insurance Services LLC.
With Starr now serving as the lead underwriter, pharmaceutical manufacturers can access a comprehensive suite of warranty services, including clinical, actuarial, regulatory, legal, accounting, and finance, all from a single warranty platform to build a drug assurance program.
Unlike traditional performance contracts between pharmaceutical companies and intermediaries, Octaviant’s warranties are issued directly to end payers, such as organisations that sponsor health plans and cover therapy costs. These warranties can reimburse payers, sometimes up to the full price of the drug, if it fails to deliver the expected outcomes.
Advanced therapies, which aim to cure rare diseases, genetic disorders, and cancers with single-dose treatments, often come with price tags ranging from hundreds of thousands to several million dollars. Since 2017, the FDA has approved over 25 of these therapies, with hundreds more in development. Despite their potential to lower long-term healthcare costs, their high upfront prices often make payers hesitant to approve them, fearing they may not work for a particular patient beneficiary.
Drug warranties offer a straightforward solution for pharmaceutical manufacturers to address these concerns, demonstrate confidence in their products, and provide financial recovery if a patient does not achieve the intended benefits.
Marc Marion, Senior Vice President at Octaviant, stated, “Our approach to drug warranties, which has significant advantages over conventional approaches like value-based agreements, requires flexibility and a willingness to innovate as key partner characteristics. Starr exemplifies these characteristics and is well-recognized as an industry innovator. Starr’s awareness of the complex regulatory landscape faced by the pharmaceutical industry supports our clients in offering highly strategic and competitive drug assurance programs.”
Marion added, “Octaviant’s warranties gives payers a tool that can genuinely diminish the risk associated with high-cost therapies and provides a payout to the most deserving party. It simultaneously can achieve significant commercial objectives for the pharmaceutical manufacturer, which includes facilitation of payer authorization and differentiating a product in a competitive market. In this manner a drug warranty benefits all parties, most importantly, the patient, by reducing barriers to essential therapies.”
Matt Taylor, Vice President, Extended Warranty at Starr, noted, “High-cost goods and services such as industrial equipment and consumer appliances come with a warranty that lets a buyer recoup some or all of the purchase if the product doesn’t perform as expected.”
He continued, “The same should be true of high-cost therapies. Successful implementation of a drug warranty, however, requires an in-depth understanding of healthcare and insurance that Octaviant, Marsh and Starr now bring together. This unique warranty offering may help encourage greater patient access to life-changing, sometimes life-saving, therapies that might otherwise not have been approved.”
Eddie Albers, US Life Science Industry Practice Leader at Marsh, said, “Innovative therapies require equally innovative approaches to the market. With this first-of-its-kind platform, clients can unlock the full potential of their drug warranty programs by accessing specialised services through a growing number of aligned partners. We are excited to have Starr join us in this endeavour.”
